Most people associate college student with loans and debt. However, there are many more savvy college students nowadays. They are looking to work, save and invest early. If you are a financially motivated student, you might want to consider buying a house in college. However, it can be very difficult to secure the money needed to get a down payment or mortgage. In this post, we’ll show you how students can overcome income challenges to buy houses.
Work Full Time In College
For the hard working students, you might be working a full time job. If you start early, you can save up a down payment in just one to two years. You might have to attend college during the nights and weekends. But, it will allow you to generate the income needed to buy a house and get approved for a mortgage. Of course, any lender will look favorably upon your full time income.
Use Your Part-Time Job For Approval
You can start with a small house or condo in college. At a lower price point, you will be able to put down a higher down payment to invest in real estate. This will help mortgage companies approve your application. If you have had a consistent part time job throughout college, your tax returns and proof of income could help you qualify for a mortgage. Once you get approved, you can continue working part-time, going to school full time and living in your new house.
Have A Parent Co-Sign The Mortgage
If you have student loans, it might be very difficult to get approved for a mortgage. Even with a high income for a student, your debt to income ratio will be totally off. In this case, college students can have co-signers for their mortgage. This gives them the credibility and financial stability to get approved by the bank. Certainly, the co-signers should be someone who can take on the financial responsibility should something go wrong.
Get A Personal Loan Not A Mortgage
Moreover, you can buy a lower priced house ($50,000-$100,000). If you can save up the majority of the payment, then you can take out a personal loan to cover the rest of the cost. While personal loans usually have a higher interest rate, the cost could be offset by the additional rental income or house appreciation. You just have to find a bargain deal in your college town and make sure you can get approved by a personal loan provider.
Buy A House With Upfront Cash
Last, but not least, you can always buy a house with cash. If you spend 2-3 years of college working and saving, it’s possible to save up the amount of a small house or condo. If you were able to pay for the house without a mortgage, you would have 100% equity in the house. Moreover, you financial security that is very rare for anyone in their 20’s. You would certainly be putting yourself ahead of many others so dream big and don’t let anyone tell you it can’t be done.
Long Term Financial Options
Moreover, college students who start buying real estate early on are more likely to have financial stability in the future. When you reach the age of 62, you might have some mortgage payments left on your house. Then, you can always apply for a reverse mortgage to lower your monthly payments. To learn more, this helpful calculator can show you the type of loan amount and interest you would be eligible for. If you end up living in that house for a long time, it could serve you financially late in your retirement age too.
It is possible for a college student to buy a house in college. You have to work extra hard, get creative and have the right support financially. Whether you can get approved for a mortgage or accumulate enough for a down payment, you have many options to save and buy a house. After all, the money you will make in rentals is a great way to start earning your money back on the house quickly.